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Dow and S&P 500 Lose Ground While Nasdaq Holds Firm

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U.S. stocks lost ground during the week, but not enough to do any serious chart damage. Chart 1 shows the Dow Industrials falling to the lowest level in a month and sliding below its 50-day moving average (in rising volume). But the Dow has yet to break a rising support line drawn under its April/May lows. Chart 2 shows the S&P 500 looking pretty much the same. The Nasdaq, however, held relatively steady. Chart 3 shows the Nasdaq Composite Index bouncing on Friday to end the week essentially flat. It also remains above its 50-day moving average. Although the broader market lost ground, it's doubtful that it will fall very far as long as the Nasdaq market continues to hold up. A lot of negative divergences pointed out over the last week remain intact (like the falling MACD lines on top of Chart 1). That situation will have to improve to signal that the market is out of danger.

John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
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